Emergent Research

EMERGENT RESEARCH is focused on better understanding the small business sector of the US and global economy.

Authors

The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

Videos

Disclosure Policy

Emergent Research works with corporate, government and non-profit clients. When we reference organizations that have provided us funding in the last year we will note it.
If we mention a product or service that we received for free or other considerations, we will note it.

As early as the 1980s, the company had installed “remote terminals” in several employees’ homes. And by 2009, when remote work was still, for most, a novelty, 40% of IBM’s 386,000 global employees already worked at home ...

IBM, of course, isn't the only well known example of a company reducing or eliminating telecommuting. Yahoo rather famously did this several years ago and Google and Apple have always tried to limit telecommuting.

These firms believe co-location leads to greater levels of collaboration and innovation. Again from the Quartz article:

What IBM should value most, says John Sullivan, a professor of management at San Francisco State University who specializes in HR strategy, are better ideas. “It turns out the value of innovation is so strong that it trumps any productivity gain,” he says ... “[Remote work] was a great strategy for the 90s and the 80s, but not for 2015.” He thinks that working together in person is one key to innovation.

At the same time, Gallup reports that overall remote work is increasing. Key quote from Gallup:

In 2012, Gallup data showed that 39% of employees worked remotely in some capacity, meaning they spent at least some of their time working in a location different from that of their coworkers. In 2016, that number grew by four percentage points to 43%.

But it's not just the percentage of employees working remotely that has increased: Employees who work off-site are also spending more of their time doing so.

In 2012, 24% of employees were spending 80% or more of their time working remotely. In 2016, 31% were found to be doing the same.

The paradox is even though the Internet and connective technologies have made working remotely easier than ever, people and companies are increasingly clustering together in fewer locations, mostly in cities.

This means thanks to connective technology location is, in many ways, less important. But at the same time, being co-located is becoming more important. Hence the paradox.

Adding to this paradox is even companies that make tools that help remote workers and teams collaborate (like IBM and Google do) are cutting back on telecommuting and requiring more face to face employee interaction.

We believe the paradox will continue. More jobs and work will become detached from place, but clustering will continue to increase and more firms will reduce remote work options for certain groups of employees.

The reason is success in a growing number of high-skill professions requires more interpersonal skills like collaboration, empathy, and managing others. As the study points out, there's a lot of research showing women, on average, have stronger interpersonal skills than men.

Key quote from the study abstract:

Since 1980, the probability that a college-educated man was employed in a cognitive/high-wage occupation fell. This contrasts starkly with the experience of college-educated women: their probability of working in these occupations rose, despite a much larger increase in the supply of educated women relative to men during this period.

So not only are women improving in terms of their likelihood of working in high wage occupations relative to men, the number of well educated women has exceeded that of men for several decades.

Yes, we're aware that men on average out earn women, hold more senior executive positions, etc. We also know there's still more work to be done on gender equality.

But the trends driving the end of men and the rise of women are powerful and show no signs of turning around. Expect women to continue to gain relative to men across a wide variety of social and economic measures in the coming years.

Because of this, don't be surprised if in another decade or so we're talking about how to achieve gender equality for men.

Our section on Women covers both the rise of women and the problems facing men in more detail.

No one wants to eat coffee for lunch or go on a bender of sleep deprivation—or answer a call from a client while having sex, as recommended in the video. It’s a stretch to feel cheerful at all about the Fiverr marketplace, perusing the thousands of listings of people who will record any song, make any happy-birthday video, or design any book cover for five dollars.

There was also a tweet that went viral about this ad. It said "The 'gig economy' is literally killing us. Most depressing ad of the day goes to Fiverr."

"In Doers We Trust" articulates the ethos of Fiverr's current bootstrapping entrepreneur members -- heroizing them -- with the goal of bringing more into the fold. The campaign positions Fiverr to seize today's emerging zeitgeist of entrepreneurial flexibility, rapid experimentation, and doing more with less. It pushes against bureaucratic overthinking, analysis-paralysis, and excessive whiteboarding.

Our firm spends a lot of time studying the psychographics (motivations, attitudes and behaviors) of independent workers. Because of this, we get why Fiverr released this ad and campaign.

Simply put, most independent workers see themselves as doers who make things happen. They take pride in being hard working and self-reliant. They also know their path entails making sacrifices in exchange for the autonomy, control and flexibility it provides.

The Fiverr ad campaign plays to these attributes.

We also study the psychographics of people who aren't independent workers. We do this to understand why some people choose to become independent while others prefer traditional jobs.

This research shows that most of those who aren't independent workers are substantially different in terms of risk profiles and attitudes about work relative to most independent workers.

The quick summary is most people who aren't independent see independent work as being much more risky, unstable and demanding than independent workers do.

These large psychographic differences explain why Fiverr released this ad and why the reaction has been so negative.

The Fiverr folks no doubt liked this ad because it fit the profile of gig workers, which is something they are very familiar with.

What they missed was the ad also triggered and reinforced the negatives many associate with independent work.

We're finishing up a deep dive research project on the risk and attitude profile differences between independent workers and those with traditional jobs. The results are fascinating.

The quick summary is UK's gig workers have a lot in common with those from the U.S. Most are part-time and working in the gig economy to supplement their income. Almost half (47%) are satisfied or highly satisfied with gig work, few (17%) are dissatisfied.

The study found about 1.3 million UK residents work in the gig economy. This is about 4% of UK adults.

The study's findings are pretty similar to what was found for U.S. gig workers in the recent Intuit On-Demand Economy study. Gig worker satisfaction is a bit lower in the UK than the U.S., but overall UK gig workers are more satisfied than not (see chart below).

The CIPD study defined gig workers as people "who trade their time and skills through online platforms (websites or apps), providing a service to a third party as a form of paid employment." This definition is pretty close to the one used in the Intuit study.

The study chart below (click to enlarge) shows UK gig worker satisfaction levels for various attributes of gig work. The last two columns show net satisfied versus net dissatisfied.

Again, these are pretty consistent with the U.S. results.

The key quote from the study report is:

Another point that should not be overlooked is that, for many people, working in the gig economy is a positive choice rather than a last-resort option in lieu of not being able to find more traditional employment. The most common reason cited by survey respondents for working in the gig economy is that it allows them to boost their income, with a third saying this is the case, with a quarter (25%) of gig economy workers reporting that their gig economy work enables them to achieve an end goal such as buying a car or going on holiday. Just 14% of respondents say they are only working in the gig economy because they can’t find a traditional job with an employer.

One warning on this study is the overall respondent pool for gig workers is fairly small (413). Also, they present a lot of data based on very small samples (often less than 100). These have large margins of error (over +-10% for under 100).

This doesn't make the study wrong or bad. Many excellent studies, including some of ours, have small sample sizes. However, when working with small sample sizes it's important to keep the error margin in mind before drawing strong conclusions from the results.

March 21, 2017

The quick summary is self-employed who are younger or have higher incomes will likely be better off under the Republican proposed American Health Care Act (AHCA, a.k.a. Trumpcare).

Self-employed who are older or have lower incomes will likely be worse off.

The law will likely not have a major impact on the total number of people who are self-employed, at least over the next 3-5 years.

The reason is most of the Obamacare provisions that are important to the self-employed - and those thinking of becoming self-employed - are maintained by the AHCA (at least so far). In particular, the Obamacare rules on pre-existing conditions and no lifetime coverage cap still apply.

The AHCA legislation will likely change before it's finalized. But there is enough information to get a general sense of its impact on self-employment.

There are three major differences between Obamacare and the ACHA that impact the self-employed. The first is the amount of tax subsidies people get under the two plans.

As the Kaiser Family Foundation chart below shows (click to enlarge), there are winners and losers under the ACHA as currently proposed. Younger and higher income people tend to do better, older and lower income people tend to be less subsidized.

The worst case scenario - as is clear from the chart - is being older with a relatively low income. Many of these people are unlikely going to be able to afford health insurance.

The ACHA also likely will mean increased premiums for older self-employed in general.

The reason is the proposed legislation allows insurance companies to charge up to 5 times the premium amounts for older people than younger people. This is a big shift from the 3x currently allowed under Obamacare.

This makes sense from an insurance perspective. Older people are much more expensive to cover than younger people. Lower premiums will also encourage younger people to sign up.

But higher premiums for older people, which are likely to happen, will be hard on aging baby boomers.

The second major difference between the ACHA and Obamacare is a major reduction in medicaid support.

This potentially affects the self-employed with low income. This kicks in after 2020 and will be vary by state, so it's too early to understand the extent to which it will impact self-employment. But it's hard to imagine a scenario where this shift is good for the self-employed with low incomes.

The third major shift is the elimination of the health insurance mandate.

Based on what we currently know, we would expect to see the percentage of self-employed covered by health insurance to fall under this plan, but not substantially - at least over the next 3 years.

Most of this decline will come from younger, healthier self-employed (under age of 40), who choose not to get health insurance due to a lack of the mandate.

In terms of self-employment in general, we aren't expecting a major impact over the next 3-5 years.

The ACHA continues to make health insurance portable and detached from traditional employment. It has winners and losers and we would expect the differences by cohort would effectively be balanced out in terms of the total number of self-employed.

We'll have more on the ACHA and how it will likely impact the self-employed and small businesses as the legislation and its impacts become clearer.

In the meantime, the Kaiser Family Foundation is an excellent source of information on this topic. They have a very nice interactive chart that looks at the ACHA by income, age and state.

The growth of food trucks is one of our favorite examples of an industry being impacted by people wanting to share experiences. There's no doubt one of the drivers of the growth of food trucks is the experience they provide and the ability for their customers to share that experience via social media.

"It’s hard to find a cluster of people standing beside a food truck in Los Angeles, who are NOT on their phones. They are tweeting their experience by the minute, instagramming their orders, and if they’re like me, blogging on the go."

The key quote from the Washington Post article is:

“It connects to the core of where kids are today,” Loerzel said. “Back in the day, I’d get a new pair of Nike Jordans to look cool and get people liking me at school. Now it’s, ‘I want to post cool stuff on YouTube.’ ”

The book's tagline is "Work is Theater and Every Business a Stage". In our opinion few book taglines have matched this in terms of predictive accuracy.

The shift to experiences is gaining strength and is being amplified by online social sharing. Small businesses that can figure out how to add shareable experiences to their product/service lines will accrue substantial benefits.

March 16, 2017

The goal seems to be to show that Airbnb contributes to local economies, creates jobs and provides opportunities for the middle class to supplement their income. Key quote from their blog post announcing the initiative:

At a time of growing economic inequality, Airbnb is democratizing capitalism and creating economic opportunities for the middle class, using technology to help connect and empower our community – not replace it. Our people-for-people platform allows ordinary people to use their house – typically their greatest expense – to generate supplemental income to pay for costs like food, rent, and education for their children. The typical Airbnb US host earns $6,100 sharing their space.

A key part of this new mix is periods of self-employment will become more common, especially for those who are older.

The reason for this shift, of course, is humans are living longer, healthier lives. Key quote:

Rising life expectancy means the level of savings required to provide a reasonable income for retirement at age 65 is becoming increasingly infeasible for most people. We predict that, given the average level of savings in advanced economies, many people currently in their mid-40s are likely to need to work into their early to mid-70s; many currently in their 20s (many of whom could live to be over 100) will be working into their late 70s, and even into their 80s.

This is partially due to age discrimination. But older Americans also like the freedom and flexibility that come with being self-employed.

Many also want to work part-time and control their schedule. This is one reason why older Americans are working in the on-demand economy (ODE), partnering with firms like Lyft, Upwork and other online talent marketplaces.

March 09, 2017

The On-Demand Economy is commonly defined as the economic activity created by online marketplaces that fulfill customer demand via the provisioning of goods and services immediately or much faster and/or easier than traditional firms.

Uber, Lyft and ridesharing services are often cited as examples. But Amazon is in many ways a better example.

However you define it, the concepts of on-demand are quickly spreading across the economy.

There's been a recent flurry of news illustrating this. These include: